Currently, numerous rules and legislation regulate South Africa’s financial sector. The CoFI Bill aims to establish one consistent rulebook governing all financial institutions’ conduct, including those of retirement funds.This initiative will enhance regulatory clarity and ensure consistent compliance across the sector.
National Treasury has been working for years to improve regulation of financial institutions such as banks, insurers and retirement funds. One big step in that journey is the CoFI Bill – short for the Conduct of Financial Institutions Bill, which, if all goes according to plan, will be tabled in Parliament for approval this year.
Why was CoFI created?
After the 2008 global financial crisis, it became evident that the financial services sector required stricter and more comprehensive regulations, particularly regarding how financial institutions treat their customers. As a result, South Africa introduced the “Twin Peaks” system of regulation. This created two main regulators: the Financial Sector Conduct Authority (FSCA) to regulate how financial institutions treat customers, and the Prudential Authority (PA) to make sure these institutions remain financially stable.
Currently, various regulatory sectors are governed by disparate laws, leading to confusion and inconsistent customer protection. These laws will be phased out over time, and the CoFI Bill will provide a single, consistent rulebook for how financial institutions should treat customers, and manage their responsibilities. This ensures that customers are treated fairly, regardless of the financial product or service they’re using.
Instead of checking if financial institutions follow every rule and regulation, the CoFI Bill focuses on principles and outcomes. This shift requires financial institutions to demonstrate that they are acting in the best interests of their customers, rather than simply ticking boxes. Additionally, the CoFI Bill will empower the FSCA with enhanced oversight capabilities, allowing both the FSCA and the PA to supervise and regulate financial institutions more effectively and take action when necessary.
Where is the CoFI Bill now?
Although CoFI was first introduced in 2018, the process of turning it into law has taken time. National Treasury has published several drafts and received feedback from the public, including retirement industry stakeholders. In this year’s budget speech, National Treasury indicated that the bill is set to be tabled later this year.
Once it becomes law, existing financial legislation like the Pension Funds Act (PFA) will continue to apply. CoFI will not replace the PFA, but will work around it by stripping the conduct provisions from the PFA. The PFA will continue to set the structural, operational, and prudential rules for retirement funds, regulating how they’re set up, governed, and managed. What will change is that some parts of the PFA related to conduct will fall under CoFI instead.
What does this mean for retirement funds?
The CoFI Bill will have several significant effects on retirement funds (which are included in the definition of “financial institutions”). It will primarily enhance governance and ensure fair treatment of members. Retirement funds will need to play their part by following the same rules and meeting the same standards of conduct and operations as the rest of the financial sector.
Retirement funds will still fall under the Pension Funds Act, but CoFI will introduce a new layer of responsibility. It will also give the FSCA more power to hold trustees and service providers accountable.
For now, trustees should focus on understanding CoFI’s overall aims – fairness, transparency, and accountability – as these will shape the future of how retirement funds operate.
Further reading
CoFI in practice – a guide for trustees
Sources
Simeka Consultants and Actuaries: Retirement matters 2/2025
Sanlam: Key Takeaways from the 2025 National Budget Proposals to be Adopted by Parliament
Moonstone: How the CoFI Bill will affect the retirement industry
Axiomatic: South African trustees: Are you ready for CoFi?
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